Second foreclosure suit hits former South Loop courthouse

(Crain’s) — The developers of a proposed South Loop condominium project face a $3.4-million foreclosure suit, just three months after their lender agreed to dismiss an earlier suit against the property, a former courthouse.

Stanislaw and Teresa Sobieski of Concept Developers Inc., failed to repay a loan on the property at 1330-1340 S. Michigan Ave. when it came due in July, according to a complaint filed Feb. 7 by Parkway Bank & Trust Co.

The Sobieskis personally guaranteed the loan, which Parkway issued in December 2006 to a Concept venture, according to the complaint, filed in Cook County Circuit Court.

Calls to Concept Developers weren’t answered. The firm has focused primarily on the Northwest Side and northwest suburbs, with projects such as a six-unit building at 5529 W. Higgins Ave., a 41-unit condo building in Schiller Park and a 21-unit project in Harwood Heights.

In the South Loop, the little-known company planned to convert the former Cook County Circuit Court domestic violence courthouse at 1340 S. Michigan into about 130 units and then construct a new building, to be called Azure Tower, on an adjacent parking lot.

During the building boom, banks were willing to take chances on residential projects backed by small developers. But following the downturn in the housing market, lenders have become decidedly less generous.

Parkway originally filed to foreclose on the site in August, with the developers and the bank agreeing to put the property up for auction. The property did not sell, but Parkway agreed to dismiss the first foreclosure suit in November.

The original amount of the loan was nearly $3.3 million, according to Parkway’s new complaint. The total amount due, including unpaid interest and other charges, is $3.4 million, the complaint says.

A spokeswoman for Harwood Heights-based Parkway did not return a message. The lawyer representing the bank, Eugene S. Kraus, a partner at Chicago-based law firm Scott & Kraus LLC, declines to comment.